While ZTE’s star continues to rise, the news isn’t all great for the Chinese telecom equipment maker, with reports surfacing today that the company may slash up to 3,000 jobs in the wake of US trade sanctions which are shortly to take effect.
Ausdroid understands that up to 5% of ZTE’s global workforce could be affected, with 600 jobs to go from ZTE’s global handset operations, including up to a fifth of the handset business in China itself. A senior executive briefed on the layoffs partly confirmed them, stating “cuts to the handset business in China will be beyond 20 percent”.
It’s also understood that there’s a list of names at ZTE who have to go amongst the cuts, because those staff have unsuccessfully applied for jobs at rival company Huawei, though the source for this information has declined to be named for obvious reasons.
The Chinese firm faces a ban on exports from US companies, severely hindering its ability to source key components, including those made by Qualcomm, Microsoft and Intel. Those sanctions are set to commence on February 27, unless a further reprieve is given (noting sequential delays have been given since the sanctions were announced in March this year, in response to ZTE allegedly supplying products to Iran).
It seems the uncertainty of trade sanctions over the head of ZTE have had an impact, with IDC reporting a drop of 36.5% in smartphone shipments in 2016 compared to 2015.
ZTE chairman Zhao Xianming said in his New Year speech to staff that the company, which has annual sales of more than $15 billion, had “encountered its biggest crisis in its 31 year history”, according to a transcript on the company’s official WeChat account, in which he also undertook to streamline parts of the business: